Kenya’s $1.88bn Safaricom sale shuts out native traders

Kenya’s resolution to promote a 15% stake in Safaricom on to Vodafone for KES 204.3 billion ($1.57 billion) from the share sale itself, rising to KES 244.5 billion ($1.88 billion) after an added upfront dividend fee, is locking out retail and institutional native traders from the most important fairness transaction within the nation’s historical past, reopening an outdated debate about who will get entry to state asset gross sales.

The Kenyan authorities opted for a personal, negotiated sale to Vodafone fairly than a public supply by the Nairobi Securities Change (NSE). The deal provides Vodafone a 55% majority in Safaricom and cuts the state’s holding to twenty%, with public traders left at 25%. 

Treasury Cupboard Secretary John Mbadi defended the construction on Thursday, saying the selection was pushed by worth and monetary urgency fairly than market entry. 

“This partial 15% divestiture will generate roughly KES 244.5 billion in combination proceeds,” Mbadi stated at a Safaricom briefing. “It is very important notice that this transaction has gained us a 23.6% premium on the 6-month quantity weighted common worth.”

The federal government says Vodafone paid a 23.6% premium to Safaricom’s six-month volume-weighted common worth, shopping for the shares at KES 34 ($0.26) every. That premium, treasury argues, outweighed the advantages of a broader public sale.

Vodafone echoed that logic, saying the transaction balanced fiscal wants with long-term technique. “Vodafone provided a premium, making it essentially the most financially sound choice,” the corporate stated in a press release. “A globally skilled majority shareholder delivers extra than simply capital.”

The construction means Kenyan pension funds, financial savings and credit score cooperative organisations (SACCOs), and retail traders had been denied the prospect to bid for a bigger slice of the nation’s most dependable dividend inventory. 

In distinction to previous privatisations reminiscent of KenGen and Safaricom’s IPO, the place public participation was central, this transaction was negotiated behind closed doorways and can solely be disclosed in full by regulatory filings after the actual fact.

Treasury insists the proceeds won’t be used for day-to-day spending. Mbadi stated the funds will function seed capital for a deliberate Nationwide Infrastructure Fund and Sovereign Wealth Fund, as soon as parliament approves their authorized framework.

Vodafone added that it will additionally make an upfront fee as a substitute of future dividends on the federal government’s remaining 20%, giving the treasury extra short-term money cowl.

Even so, Safaricom now strikes from state-backed nationwide champion to totally foreign-led operator, whereas native traders stay locked on the margins of the most important balance-sheet reshuffle in Kenya’s capital markets in additional than a decade.

In addition to parliament, the deal nonetheless requires extra approval from the Capital Markets Authority (CMA), the Competitors Authority (CAK), and sector regulators.